SA cheap chrome ore threaten Zim mining sector

Munyaradzi Musiiwa, Midlands Correspondent
THE local chrome sector might fail to reach the projected annual target output owing to plummeting chrome ore prices on the international market as well as cheap quality chrome ore from South Africa that has flooded the Chinese market.

In the past three months the chrome ore prices were hovering around $200 per tonne but have since fallen to around $90 per tonne due to the stock piling of about two million tonnes by China which is the largest consumer of the commodity at the moment.

The dire situation has been exacerbated by cheap chrome ore from South Africa which is being exported to China much to the detriment of the Zimbabwean mining sector which has the best grade of the mineral in the world.

Vice-President Emmerson Mnangagwa recently announced that the country was looking forward to generating $3 billion from mineral exports with chrome expected to contribute 50 percent. This is however, threatened by falling prices of chrome ore on the international market coupled with the cheap South African minerals.

In an interview on the sidelines of the Gweru Chrome Miners Indaba in Gweru last week, Mineral Marketing Corporation of Zimbabwe (MMCZ) deputy general manager marketing Mr Masimba Chandavengerwa said the chrome mining sector might plunge into that predicament for the next six months, a situation which has scared potential buyers.

“The international market is affecting all suppliers of chrome ore mainly because in China there are almost two million tonnes of ore reserves and also from South Africa there is cheap low quality material coming from there and until such a time that it has been moved you don’t expect prices to firm up in the short term but in about five to six months we expect the market to start stabilising and also the prices,” he said.

Mr Chandavengerwa said at the moment an average grade of chrome ore was selling at $80 to $90 per tonne.
He said as a result buyers were not prepared to commit to the local market thereby affecting the viability of small-scale miners whom he said were not liquid enough to stock pile.

“On average the cost per tonne should be around $45 because these guys are not mining deep. We think at those price levels it’s still feasible. But the unfortunate part is that the buyers are not prepared to commit because they think the next six months prices will continue falling. So the market has to stabilise first before we conclude deals with the buyers,” he said.

He said to avoid stock piles of chrome ore as a nation there should be mechanisms in place such as funding smelters so that they buy from the small scale miners.

“If the small-scale miners are failing to sell on the international market, they should have local smelters who should be looking for material so that the small -scale miners are not prejudiced when the international market is not buying. Small-scale miners can’t stock pile for six months, they need the money, they need to be paid on time,” said Mr Chandavengerwa.